Aug 8, 2023

For some U.S. financial regulators, the ghost of Libra — the then-Facebook effort to establish a mass-appeal stablecoin — will forever haunt the debate over regulating stablecoins.

Video transcript

We're talking about paypal stable coin. And in a thoughtful piece by Jesse Hamilton, one of the regulatory reporters at Coindesk, he was drawing key parallels to the whole Libra episode. Remember when Libra launched from Facebook and they faced immediate blowback from Capitol Hill. People, apparently that Jesse talked to suggest that maybe just maybe some of that could be happening behind the scenes in Capitol Hill. Now uh drawing the parallel is certainly uh reasonable. But again, it's unclear if we're going to see that level of backlash that Libra faced when it launched all the way back in 2019 and ultimately never saw live day due in part to a lot of that blowback. I think the key difference here is that you have uh congressmen uh Congress people mchenry in this instance, coming out and championing stable coins as a key part of the 21st century payments system. Not that did not happen back in 2019 when uh a big tech company issued or attempted to issue a stable coin of its own. So I think maybe the the times have changed, but certainly whispers of Libra and DM seem to be echoing on Capitol Hill. Anyway, interesting development to see mchenry praise this thing, uh almost immediately. And again, I think it suggests that maybe stable coin legislation is more likely to come to pass in DC relative to the, some of the other crypto related bills that are up for consideration. Well, I'm gonna throw this your way. Very curious for your thoughts on this piece. Yeah, it's probably back to 2019. Uh, originally for meta stable coin was world coin. There was like a 30 day window where that was out there and then they changed to uh Libra. There was a bunch of different projects building around this. We had going to Capitol Hill. Tons of crypto memes were born out of that, you know, hour grilling where Mark Zuckerberg and his robotic suit was uh you know, poked and prodded by Brad Chairman and the likes it was good stuff and then it failed because no one wanted to see Facebook now met up have this sort of power, especially the Federal Reserve, which was looking at this and being like, hey, that could actually destabilize everything we're doing. If you think about a meta which has billions of users, believe whatsapp is one of the largest products in terms of users with like 2.4 billion users. Users imagine like funds flowing on a project like that be very difficult for the Federal Reserve or one of these other agencies in Washington to understand the monetary system, once you start having these cross border payments swapping back and forth so fast. And I think that's sort of like the larger concern here. The smaller concerns of course, are like the criminal angle, right? Like who moving money or money laundering or sort of like nefarious activities going on. They want to be uh smart about that, but that whole meta thing was like, kind of kind of broke open the door for this to happen later, right? Took a few years and I think it's going to take some further legislation to see something like this develop. But paypal is moving in where a meta sort of made the first strides. Uh curious enough or funny enough, I guess meta sort of abandoned the whole idea, right? They sold a lot of the architecture, they sold a lot of the ideas to a few different companies and they disbanded that and they went right to the Metaverse which is not doing super hot right now and now paypal is walking in, they could boot something up so props to them, Wendy. So what I wanted to say about this is I think it's super interesting that they're very concerned about regulating stable coins but not actual crypto projects. Because wouldn't that be like, isn't that the main focus is to protect retail and to make sure that we have positive regulation so that people can continue to build, contribute, not leave the US. So I'm not understanding why the sec and some of the other public servants have pushed so hard against crypto asset companies. But then when it comes to a stable and then they kind of retract and then when we get something like stable coin, like we have to regulate, they want something super fast. So I'm not really understanding why we can't do both at the same time. And again, I don't like the stable coins. I don't think I don't like paypal, stable coin in any way, shape or form. I think it's very predatory. I don't think that they're gonna be very transparent in what this thing actually does. And um I guess regulation for this stuff is good. But at the same time, I feel like we really need some sort of crypto guidelines to, to help um us continue to build and grow, but at the same time, we're not getting it. And it's also interesting to see Patrick M Henry come out and say this because aren't they supposed to be for liberty? Well, I think it, I think it, I think it's a, well, I'm gonna leave the Patrick mchenry comment there, but I think it's just different times and paypal is a different company than Facebook, um or Meta is and was I think I see a lot of similarities here between like institutional players getting into crypto and now paypal getting into stable coins. I think that it ultimately it is going to push the industry forward. And I don't think that regulations is bad. I think that regulated products are important for mainstream adoption for like regular average everyday joes who want to get into crypto, who are really used to banking products, who have trust in paypal's brand to use um applications like paypal for day to day transactions to start to experiment, experiment with crypto. And then later on, they have the um opportunity or the option to like I said yesterday, get more and more decentralized. We had the head of strategy at XOs on first mover this morning and asked if maybe they were in conversations with platforms like X for products similar to this and there was no outright no. The answer we got was that they have been in conversations with many of the big tech firms, many of the big financial firms on products like this. And so I think that that is really interesting given what happened with Facebook. So and in a way, I feel like Facebook kind of, you know, took, took a step forward so the rest of the industry could run when the time was right? And maybe now is when the time is right, Zach. Yeah, I think on the regulation side like stable coins are most similar to what Washington already knows how to deal with, right. These are dollars sitting in a bank somewhere that represented in tokenized form on various blockchains can be sent across the world easy peasy. Right. And I think there needs to be more clarity around how they're treated, how they're taxed. Right. Should, um, stable coins be treated differently from how crypto assets are treated under the current, uh IRS guidelines. Right. If that were to be the case that stable coins are actually, you know, money, not assets. Right. And you're not sort of implicated in sort of, um, uh, taxation issues that you find with other crypto assets. I think that would be hugely uh a huge improvement and hugely important for how cross-border commerce gets done using stable coins, whether it's paypal's, whether it's us DC, whether it's tether, whatever you name it. Right. So I think um similarity with existing sort of uh banking regulations is probably why Congress sees this as an opportunity to act. Whereas on the other stuff and we've seen this in other jurisdictions. D I is just way different, right? There's a whole another set of decisions that need to be made around that when you're, when you're doing on chain finance, uh the stable coin stuff feels a bit more comfortable. Right? And so I think um at least many people in the industry are hoping that the stable coin legislation can provide some of that clarity for teams to build with stable coins being a key part of how they do business. And I think that's probably what maybe hopefully this um continues to sort of catalyze that conversation in DC with a big player, a big trusted player like paypal stepping in uh will, what are your thoughts? I think you guys have missed the biggest question here. And that is, has Mark Zuckerberg's brand revitalization going on right now. Made it possible for him to move forward with the table coin. I think it could. I feel like in 2019, no one liked Mark Zuckerberg, no one liked Facebook or Meta. So they weren't gonna go along with this, but he's kind of doing well right now, right? He's got like this whole beef with Elon going on. He's got threads launching. I think there could be some room for it. I feel like Zuck is like a big, I feel like Zuck is like a big boomer and I think people are just making fun of him. I don't think they're really take, I'm being serious. I don't really think they're taking him seriously. Like he's made so so many poor business decisions with Facebook re branding to Meta and the whole web three thing. Like they were gonna hire people, then they wanted to retract it and then they did the stable coin and then something happened with that. So to me, the stable coin is kind of like that's why I have this on. I feel like it was pushed out and then pulled back on purpose. Um Obviously, I don't have any evidence supporting that, but it, there's just, I don't know, I just feel like Zuck is just kind of there and no one's really taking him or anything. He's doing seriously. Like the question though, Wendy Good is have the good business decisions outweighed the bad ones. What good business decisions has have they made? I mean, Instagram was cool for a while. No, Instagram is like empowering communications for most of the world. But I feel like, but didn't, didn't he buy those? He bought like a million dollars a long time ago. But hyper, hyper targeted advertising. That's potato, potato.

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